Analysts: Scattershot ‘industrial strategy’ better than none

Remember when we talked about how difficult it is for the Pentagon to even think coherently about its industrial base — let alone draft an “industrial strategy” that could help keep its vendors healthy? Yep. You’ll have that, three defense analysts told House lawmakers on Monday. Acknowledging those contradictions and moving forward could be the best way to preserve key parts of the defense business, they argued.

DoD and Congress’ ironclad faith in “competition,” for example, doesn’t make sense in some areas but does in others — and that’s just the way it is, said Pierre Chao of the Center for Strategic and International Studies. If the Army wanted to field a new digital gadget for every soldier, for example, it could probably get a great deal by taking advantage of today’s vibrant consumer electronics industry, he said. If it wanted to build a new tank, not so much — there just aren’t the same number and diversity of companies for that to make sense.

Chao said the Pentagon can be good at planning to help support industries, but the areas in which it choses to do so often don’t make sense in the big picture. “I have a very specific industrial strategy for black berets, but I don’t have one for semiconductors,” he said. This can mean that DoD often does not fully realize how its decisions affect not only the big brand-name defense contractors, but the ones two and three notches down the line. Chao gave another example about the importance of planning: Suppose there’s a company that makes the linen bags that hold the gunpowder Navy warships use to fire their 5-inch shells. If the only other thing that company does is make habits for nuns, and the nuns cancel their contracts, that means the firm might close and cost the Navy a key piece of equipment.

Fred Downey, a vice president for the Aerospace Industries Association, acknowledged that preserving certain parts of the industrial base “might not seem like the most cost-effective thing, program by program.” But he argued it could prove money well spent either for many small things, such as Chao’s linen subcontractor, or a few big important things, such as nuclear submarines or long-range bombers. The important thing to understand is this is not a free market, said Barry Watts of the Center for Strategic and Budgetary Assessments — we’ve heard him make this case before — so he said it’s no good treating it as one.

If you’re holding your breath waiting for all-encompassing strategy guidance — or an announcement about when one might appear — it’s all right to let go. Although House lawmakers were eager for witnesses’ analysis and got in a few digs of their own against DoD, there didn’t seem to be much sense of urgency. Downey even acknowledged that other countries with industrial strategies like the one AIA wants, including France, the United Kingdom and China, haven’t “been exceedingly successful in all cases.” Yes — what he and lawmakers did not address Monday was the downsides of those other cases, and how they might not transfer well to the U.S. military.

European militaries, for example, tend to phase in new programs over long periods of time to make them more affordable, but not ready to fight. The Royal Navy’s Type 45-class destroyers entered service without the missiles that were to have been their signature weapon. France’s deliberately built its aircraft carrier, the Charles de Gaulle, with a nuclear power plant that would require more frequent service to create work for maritime workers on its Mediterranean coast. Eurofighter Typhoon skeptics have argued for years the program is more about aerospace jobs in the U.K. and Europe than it is about fielding a relevant combat aircraft — a DoDBuzz commenter once turned a terrific phrase to describe it, calling the Typhoon “the greatest VCR ever made.” (That’s another discussion for another time.)

So there’s no question that planned systems can produce good and even great weapons, as the Europeans and the Russians have proven. The question for Washington today is whether those models make sense in an American context, even if they do, which elected officials will take the risk of standing up and fighting for them.